Error of Law: An Exception to the Discoverability Principle?
44 Pages Posted: 21 Mar 2019
Date Written: August 2, 2018
Limitation statutes can become instruments of injustice when they foreclose civil recourse before plaintiffs could reasonably discover their injury. For this reason, reform has swept Canadian provinces to align the commencement of limitation with plaintiffs’ “discoverability” of their claims. Canadian common law nevertheless maintains that “[d]iscoverability refers to facts, not law. Error or ignorance of the law, or uncertainty of the law, does not postpone any limitation period”: Hill v Alberta (1993) 100 DLR (4th) 331, §9. The effect of this exception is that limitation periods are not tolled on account of mistake of law, misjudgments of legal rights or practice, the overruling of precedent, or judicial declarations of void or unconstitutional legislation. A plaintiff’s cause of action in such cases will generally accrue when she suffers loss or damage, not when she discovers her error of law.
Canada’s discoverability exception is a problematic doctrine. It appears to resurrect the fact/law distinction that was famously impugned in Air Canada v British Columbia  1 SCR 1161. It curtails the scope of restitutionary actions grounded in mistake of law. And it stands in stark contrast to prominent English precedent, which holds that when error in a point of law is the basis of a claim, limitation begins to run only “when the point has been authoritatively resolved by a final court”: FII Test Claimants v HMRC  STC 696, §372. In practice, the error-of-law rule tends to protect those who make legal rules (the Crown and public authorities) and impede those who have been harmed by unjust laws (most notably, aboriginal groups with historic grievances). This paper develops a revised understanding of the error-of-law rule that strikes a better balance between protecting past reliance interests and vindicating plaintiffs’ rightful position.
Keywords: private law, restitution, mistake of law, Limitation Act, limitation postponement, reasonable diligence, Kleinwort Benson, Deutsche Morgan Grenfell, Franked Investment Income Group, Prudential Assurance, Nielsen, Central Trust v Rafuse, Goodswimmer v Canada, Salna v Awad, Canadian Legion Norwood
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